PM’s ‘name and shame’ jobs ploy

The federal government will attempt to boost Australian jobs by making it more difficult for miners to win tariff concessions to use imported manu­factured products on large resource projects.

Resource companies will have to reveal on a new public website what local suppliers they use for major projects, as the government tries to “name and shame" those that fail to encourage Australian participation.

The government will also make $6 billion in federal grants – including to the states – contingent on publicly specifying what domestic contractors are used.

While business groups welcomed the measures unveiled after the jobs forum in Canberra, the oil and gas industry feared they faced more red tape and miners branded the rationale “devoid of facts" because the industry already uses mostly local suppliers.

Following the two-day tax forum, the jobs summit heard from Dow Chemical Company chief executive Andrew Liveris of the importance of greater government support for high value-added manufacturing and from UTS Sydney professor Roy Green of the necessity to lift innovation to spur productivity.

At the conclusion of the forum, Ms Gillard announced resource companies seeking exemptions from the general tariff on manufactured imports to construct mining projects worth more than $2 billion would have to comply with more rigorous public disclosure requirements on a public website to be monitored by the government. In addition, federal and state government contracts worth more than $20 million will be required, for the first time, to publicly list participation by local suppliers. These grants were worth $6 billion in 2010-2011.

At present, resource companies can gain approval for the tariff exemption on a “tick and flick" basis and are not required to provide detailed public information on what local contractors have been used.

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The Business Council of Australia and Australian Industry Group welcomed the initiatives, but the Minerals Council of Australia’s deputy chief executive, Brendan Pearson, warned the government against “hasty adoption of measures without meaningful resort to the evidence".

“The simple fact is that the Reserve Bank has pointed to the substantial domestic content in mining sector purchasing," Mr Pearson said.

“A recent RBA paper noted: ‘Over the life of a project, the domestically contracted share of mining investment averages about 70 to 80 per cent for iron ore projects and noted that similar percentages apply for coal projects.’ "

Steel Institute industry development manager Ian Cairns said the government plan went some of the way towards measures the industry had called for to encourage resources companies to spend more on local materials.

“It remains to be seen whether it provides more work, but I think it will," he said.

But there were concerns last night that the changes could weigh companies down with more red tape.

The Australian Petroleum Production and Exploration Association said it wanted to work with the government to better understand the new expectations.

“We’re very keen to be part of the process to be sure it doesn’t turn into a bureaucratic process that adds little value, imposes significant costs or delays projects decisions," an APPEA spokesman said last night.

“The industry is comfortable with working with the government to show the initiatives in place deliver full, fair and reasonable opportunities."

The general tariff applying to imported goods is 5 per cent.

Ms Gillard said the assistance measures would be consistent with Australia’s World Trade Organisation’s obligations.

But she warned that the government would also “ramp up monitoring of the scheme".

“This will create more opportunities for Australian businesses to compete for lucrative contracts in the resources sector and across the economy more generally," she said.

The government will appoint a working group comprising business, state government and trade union representatives to advise on implementation of the measures.

The government will also establish a Resources Sector Supplier Advisory Forum next month to examine claims Australian companies have been excluded unfairly for opportunities in the coal, iron ore, liquified natural gas, steel and mining technology industries.

New assistance will be extended to the tourism sector by allowing operators to apply for grants under the Industry department’s Enterprise Connect program.

The government has been under pressure from some of its own caucus, trade unions and some manufacturers to help the non-resource sectors, with claims that global mining companies are sourcing products from favoured overseas suppliers rather than domestic contractors.

Trade unions and some Labor MPs have called on the government to change the rules to force resource companies to use local products - such as steel. But the government has decided against such a move and instead is opting for greater transparency in the Australian Industry Participation plans required by companies seeking access to tariff duty concessions.

The jobs summit included about 80 representatives from business, trade unions, universities and community groups for closed session discussions.

“Australia has a huge opportunity to be part of the Asian growth story. But participants from different sectors recognised that we need to pull out all stops to make the economy as competitive and diverse as possible".

She called for a renewed emphasis on skills and innovation to lift productivity.

Australian Industry Group chief executive
Heather Ridout
said the government procurement measures would help “level the playing field", “is a positive step and recognises the significant pressures the sector is currently experiencing."

But she warned it would take time for the measures to have an impact.

The Steel Institute of Australia, Australian Industry Group and steelmakers
BlueScope Steel
and
OneSteel
have stepped up pressure on the government over recent months to save jobs in manufacturing since the steel industry announced job losses of almost 2000 staff.

Ms Gillard told the forum despite the latest International Monetary Fund warning about downside risks for the global economy, Australia was in a rapidly growing region.

Australia had already experienced rapid growth in employment in mining, which grew by 14 per cent to about 200,000 over the last 12 months.

She said construction was expected to grow as mining projects came on stream.